9911796707
TMI Blog2010 (4) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... genuineness of the sundry creditors - So far as genuineness of sundry creditors is concerned, it is seen that these creditors have been reflected in the books of account maintained by the assessee - Besides, the assessee has filed attested copies of affidavits of these creditors who confirmed that the amount mentioned by the assessee in its balance sheet in their names was on account of material supplied by them or services rendered by them which has been received by them from the assessee firm in the subsequent year - Decided in favour of assessee. - IT APPEAL NO. 283 (CHD.) OF 2009 - - - Dated:- 13-4-2010 - G.S. PANNU, MS. SUSHMA CHOWLA, JJ. S.P. Khutan for the Appellant. S.K. Mukhi for the Respondent. ORDER Ms. Sushma Chowla, Judicial Member. The appeal by the revenue is against the order of CIT(A), Karnad, dated 23-1-2009 relating to assessment year 2005-06 against the order passed under section 143(3) of the Income-tax Act. 2. The assessee has filed cross-objection against the appeal filed by the revenue. Both the appeal of the revenue and cross-objection of the assessee were heard together and are being disposed of by this consolidated order for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al accounts is in accordance with these books of account'. Thus under the said circumstances the application of net rate of 4 per cent/5 per cent by the CIT(A) is bad in law and therefore, needs to be quashed." 6. The brief facts of the case are that the assessee firm is carrying on the business of civil contractors. The case was selected for scrutiny and statutory notices were issued from time to time. The assessee failed to comply with various notices issued by the Assessing Officer. The Assessing Officer also issued a letter dated 11-7-2007 seeking explanation of the assessee on the proposed addition. A reminder was also sent by the Assessing Officer vide letter dated 20-8-2007 which remained uncomplied with. The Assessing Officer also summoned under section 131 of the Income-tax Act to M/s Tara Chand Damodar Dass, Surajpur, loan creditor of the assessee and the statement of Shri Tara Chand was recorded on 3-11-2007. In the said statement, the concern denied any balance due towards the assessee as on 31-3-2005. In the absence of compliance by the assessee, the Assessing Officer was constrained to complete the assessment on the basis of the available material. The Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of the second lady introduced with effect from 24-1-2005, the salary of Rs. 1,000 per month was provided and the same was also disallowed. Out of the total claim of the assessee in respect of salary paid to the partners, deduction or Rs. 6,750 was allowed by the Assessing Officer. The Assessing Officer noted that the assessee has shown sundry debtors of Rs. 8,06,487 as on 31-3-2005 as per the list incorporated at p. 5 of the assessment order. The assessee had failed to file the explanation in respect of the abovesaid creditors. Summons were issued to Shri Tara Chand, one of the partners in Tara Chand Damodar Dass, who in his statement deposed that there was no transaction with the assessee during the financial year 2004-05 and nothing was due on 31-3-2005. The Assessing Officer afforded an opportunity to the assessee to cross-examine the said creditor and in the absence of any evidence, the sundry credits of Rs. 8,06,487, as per the Assessing Officer remained unproved and the same were included as income of the assessee. 8. Before the CIT(A), it was explained by the assessee that till financial year 2003-04, there were four partners i.e., Mr. Ram Jee Dass Batra, his son Kama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernal vouchers. In absence of genuine bills/vouchers the correctness of purchases made and expenses claimed by the assessee cannot be subject to verification. 9. The CIT(A) after considering the documents/evidence produced by the assessee and also the books of account produced before the Assessing Officer during the remand proceedings, the remand report of the Assessing Officer and the rejoinder of the assessee, admitted that proper books of account have been maintained and all the receipts were from Government body/agencies. The CIT(A) also noted that the Assessing Officer had neither rejected the books of account nor passed the order under section 144 of the Income-tax Act but had estimated the income at the rate of 8 per cent of the gross receipts while passing the order under section 143(3) of the Act. The CIT(A) held that the Assessing Officer had not given any basis for adopting the rate of 8 per cent of gross receipts to work out the net income of the assessee even after accepting the plea of the assessee that its business was adversely affected on the death of the working partner. The CIT(A) however, noted that even during the remand proceedings, it has been found by Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on made by the partners of the assessee firm and held the same to be properly explained. In the totality of facts and circumstances, we are in conformity with the order of CIT(A) in deleting the addition of Rs. 4,40,000. We confirm the same and dismiss the ground No. 2 raised by the revenue. 14. The ground No. 3 raised by the revenue is against the allowance of interest on the unproved additions in the capital accounts of the partners. In view of our decisions in para 14 hereinabove, we dismiss this ground of appeal raised by the revenue as the issue is consequential to the dismissal of ground No. 2 raised by the revenue. 15. The ground No. 4 raised by the revenue is in respect of addition on account of creditors. The CIT(A) had called for remand report in respect of the genuineness of the sundry creditors and the Assessing Officer vide letter dated 14-1-2009 in para 2(v) opined as under : "So far as genuineness of sundry creditors is concerned, it is seen that these creditors have been reflected in the books of account maintained by the assessee. Besides, the assessee has filed attested copies of affidavits of these creditors who confirmed that the amount mentioned by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
